Chapter 30

Globalization and Corruption

CAROLYN WARNER

Globalization has helped to expose the extent to which corruption is embedded in international economic exchanges. This has led some to think that globalization inevitably reduces corruption by first revealing it and then subjecting firms and states to bribery-discouraging pressures from the free market. However, for as much as globalization helps to reduce corruption, its effects on corruption are not inherently in the presumed positive direction. Globalization creates incentives and new means for corruption, the standard definition of which is the misuse of public office for private gain (Philp 1997; Gerring and Thacker 2005; Scott 1972).

The standard expectation is that more international trade decreases corruption because states, now competing globally, have to present clean business environments to attract business. In addition, firms in any particular country, now subject to competitive pressure from foreign firms, cannot sustain the costs which corruption adds to their operating expenses. Thus, the free trade which is part and parcel of globalization is supposed to dampen corruption. It raises competitive pressures on firms, which lowers their ability to tolerate the costs of corruption that they may have been paying. If free trade also includes an agreement to open up states’ public procurement practices to bids from foreign firms, then politicians and bureaucrats should also find it harder to continue corrupt practices. ...

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